Ghana’s debt stock hits 60.8 per cent of GDP

Finance Minister Seth Terkper has confirmed that Ghana’s debt-to-GDP ratio has crossed the critical 60 percent mark.

He says the debt stock currently stands at 60.8 percent of the country’s total Gross Domestic Product (GDP).

The minister revealed this while presenting government’s 2015 budget estimates to Parliament Wednesday.

Debt-to-GDP ratio is the  ratio  between a country’s  government debt  and its  gross domestic product (GDP).

A high debt-to-GDP ratio indicates an economy that is unable to produce and sell sufficient goods and services to pay back debts and therefore incurs further debt.

By standards of the International Monetary Fund (IMF), low-income economies whose debt-to-GDP ratio exceeds 60 percent face serious risks of falling into a deeper economic mess.

Government had previously vehemently denied reports that the debt-to-GDP ratio had exceeded 60%.

But Seth Terkper told Parliament Wednesday “Ghana’s public debt stock as a percentage of GDP has been rising over the years. It increased from 36.3 percent in 2009 to 48.03 percent in 2012 and further to 55.53 percent in 2013.”

He said “As at end of September 2014, the debt stock stood at 60.8 percent, largely on account of increase in external net disbursements for infrastructure projects and net domestic issuance, and the depreciation of the cedi.

This does not take into account recent loans being contracted by government and other state agencies.

“The provisional public debt stock as at end September 2014,” the minister noted, “stood at GH¢69,705.90 million (US$21,733.51 million). This was made up of:

GH¢40,644.15 million (US$12,678.62 million) and GH¢29,041.75 million

(US$9,054.89 million) for external and domestic debt respectively.”

He insisted that some of the loans contracted were used to finance construction projects such as the University of Ghana Teaching Hospital, the Kwame Nkrumah Interchange and the Legon-Madina Interchange.

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